What investors can expect from the elections

Investors should remain calm and focus on long-term diversification. The upcoming elections are expected to lead to coalition politics and short-term uncertainty, but markets have largely priced in these risks.

This is the view of Citadel chief economist Maarten Ackerman, who said investors have no reason to panic ahead of the elections on 29 May 2024.

The upcoming elections are among the most contested and uncertain in democratic South Africa, as the ANC stands to lose its majority for the first time in 30 years.

Out of many possible scenarios, the one that seems most likely to market analysts is that the ANC will receive between 45% and 47% of the vote.

Ackerman said this will usher in a new era of heightened coalition politics and persisting investor uncertainty.

However, he reassured investors that they do not need to panic, as the markets have already priced this uncertainty in.

Market consensus

Ackerman said the upcoming elections are expected to be free and fair, and the market expects the ANC’s dominance to decline further. 

If the ruling party manages to keep more than 50% of the vote, coalition politics becomes less important, and this will mean more of the same. In other words, the market will not have much upheaval or panic. 

On the other hand, if they get below 50%, which is the market consensus, South Africans are likely to see more coalitions, a form of government that the country has never seen at a national level.

Therefore, no matter how these coalitions lean, they will most likely create more uncertainty for investors over the short term.

Political analysts from the Paternoster Group predicted that the ANC would most likely receive between 45% and 47% of the national vote. 

They said such an outcome would not be seen as an unexpected dramatic shift in the South African political landscape. Therefore, it was unlikely to cause the markets to panic or “overreact” to the election results.

“Investors are already leaning towards the coalition scenario and these risks have already been priced in mostly by the currency, bond and equity markets,” Ackerman said.

“If anything dramatic and unexpected happens on the day, such as violence, protest or extreme weather preventing optimal voter turnout, markets might react negatively but should normalise as soon as the political dust settles, probably within a week or two.” 

“Markets will return to fundamental drivers soon after the elections, and the rand should soon be impacted by the likely path of US interest rates towards the end of the year rather than the election outcome.”

However, Ackerman said any coalition, regardless of whether it leaned towards pro-business or pro-populist alliances, could make it harder over the next few years to achieve policy certainty and expeditious policy execution. 

It is also likely that smaller parties such as Rise Mzansi, Action SA and Good could tilt policy direction, especially if any of them get more than 3% of the vote and end up in coalition with the ANC.

Citadel chief economist Maarten Ackerman


Ackerman said well-diversified portfolios are prepared for increased volatility because they invest for the long term and do not make decisions based on upcoming events. 

In addition, while many South African stocks are undervalued right now, many present as a solid investment opportunity. 

“We will look into these local opportunities, especially if we believe in the quality of the underlying businesses. We are valuations driven, and that means looking at what you pay versus what you get,” he said. 

“We assess the entire investment landscape, of which South Africa is 1%, and therefore ensure that we are globally well diversified to weather any local or global storm.”

Ackerman also explained that there was a low correlation between short-term political noise and long-term market performance.

He said he would never advise Citadel’s high net-worth clients to completely withdraw from South Africa’s investment landscape. 

“The country offers many quality companies with a strong future, and given current monetary policy, our real yields – cash after inflation – are some of the highest in the world,” he said. 

“Interest rate cycles, tax challenges, elections and conflict can be found anywhere in the world.” 

“So, the secret to investment success is diversification, locally and globally, while sticking to a well-defined financial plan.” 

He said the future is uncertain and will surprise. Therefore, investors must have the freedom to choose – “that’s true wealth”.


Top JSE indices